Mansour v El Nasr Export & Import Co, 1972-73 ALR S.L. 385

SECTION 42 MANSOUR v. EL NASR EXPORT & IMPORT CO .• 1972-73 ALR S.L. 385 C.A. third party victims of road accidents must be content with the rights and benefits given to them by the Motor Vehicles (Third P~y Insurance) Act (cap. 133) and by the other laws of the land. For these reasons, I would allow the appeal. FORSTER, J.S.C. and BROWNE -MARKE, J.A. concurred with the judgments of both BETTS, J.S.C. and LUKE, J.S.C. Appeal allowed. MANSOUR v. EL NASR EXPORT AND IMPORT COMPANY Court of Appeal (Cornelius Harding and Tejan, JJ. A. and Rowland Harding, J.): October 18th, 1973 (Civil App. No. 6/73) [ 1] Civil Procedure-pleading-matters which must be specifically pleaded accord and satisfaction as defence to action for breach of contract: In an action based on breach of contract, the defence of accord and satis faction may be relied upon only if it is pleaded specifically (page 393, lines 37-38; page 394, lines 1-3; page 400, lines 38-40). [ 2] Contract-accord and satisfaction-meaning: When a contract has been broken and the parties to it agree that the party in breach should give or do something to or for the injured party, who agrees to accept this in discharge of his cause of action against the other, there is an "accord," which will amount to a defence to an action based on the breach of contract if there is also "satisfaction," i.e. the party in breach perform ing in full and not merely in part his promise to give or do something (page 394, line 16- page 395, line 4). [ 3] Contract-accord and satisfaction-must be specifically pleaded: See [ 1] above.

[ 4] Sale of Goods-conditions and warranties-quality of goods-oral assur- 30 ance as to quality of specific existing goods is warranty-if omitted from written contract takes effect as collateral contract or as term of contract: When the seller of specific existing goods gives an oral assurance about their quality to a prospective buyer, that assurance is a warranty which, if omitted from the subsequent written agreement, prima facie takes effect as either (per Tejan, J.A. at page 390, lines 15-18; page 390, 35 line 39- page 391, line 2; page 391, lines 27-37; Cornelius Harding, J.A. concurring) an independent contract collateral to the principal agreement or (per Rowland Harding, J. at page 398, lines 20-30) as a term of the contract, the breach of which gives the buyer the right to claim damages, but no right to repudiate the contract (per Tejan, J.A. at page 391, line 27- page 392, line 2; Cornelius Harding, J.A. con- 40 curring).

[ 5] Sale of Goods-examination of goods--1;pecific existing goods-if quality warranted by seller, examination by buyer not necessary unless condition of contract: When the seller of specific existing goods has given a warranty as to their quality, it should not be necessary for the buyer to examine the goods unless it is a condition of the contract that the goods 5 should be examined (per Tejan, J.A. at page 390, lines 18-22; page 391, lines 2-7; Cornelius Harding, J.A. concurring). The appellant brought an action against the respondents in the High Court for general and special damages resulting from a breach 10 of contractual warranty by the respondents. The appellant agreed to buy 8,000 bags of Egyptian onions from the respondents. The latter gave an oral warranty that the onions were "in good condition" but this warranty was not in corporated in the written agreement. 15 The appellant's agent took delivery of the onions at the quay but it was not possible to examine them at the time since it was necessary to remove them quickly to avoid rent. The onions were taken to the appellant's store where they were sorted and found to be largely rotten. The appellant complained to the respondents 20 who disclaimed liability. The parties reached a compromise, how ever, under which the respondents would pay compensation to the appellant and also give him exclusive rights to import Egyptian onions into Sierra Leone for the next three years. The compen sation was paid but the respondents found it impossible to 25 implement the second part of this agreement. The appellant then brought the present proceedings for damages. The High Court (McCormack, J.) found that the respon dents had orally warranted the soundness of the onions, but said that the appellant should have examined them to ensure that they 30 conformed with the warranty, and implied that the appellant could have rejected the onions. It also found that the compromise agreement reached by the parties and partially satisfied by the respondents constituted an "accord and satisfaction" and had dis charged the appellant's right of action, although the defence had 35 not been specifically pleaded by the respondents. The appellant's claim was therefore dismissed. On appeal the appellant contended that- (a) having found that the respondents' statement amounted to a warranty the trial judge erred in holding that the appellant should have examined the 40 onions and by failing to reject them had accepted them with knowledge of their poor condition and was not therefore entitled

MANSOUR v. EL NASR EXPORT & IMPORT CO., 1972-73 ALR S.L. 385 C.A. to damages; (b) the trial judge erred in finding that the compromise agreement and its partial satisfaction constituted accord and satis· faction so as to disentitle the plaintiff frotn claiming damages for the breach of contract. The appeal was allowed and general and special damages were 5 awarded. Cases referred to:

(1) Bannerman v. White (1861), 10 C.B.N.S. 844; 142 E.R. 685, applied.

(2) Harrison v. Knowles, [1918] 1 K.B. 608; [1918-19] All E.R. Rep. 306, 10 applied. Legislation construed: Sale of Goods Act (Laws of Sierra Leone, 1960, cap. 225), s.2(1): The relevant terms of this sub-section are set out at page 391, lines 18-23. s.16(2): "Where goods are bought by description from a seller who deals in goods of that description (whether he be the manufacturer or not), there is an implied condition that the goods shall be of merchantable quality: Provided that if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed .... " s.35(1): The relevant terms of this sub-section are set out at page 399, lines

Rogers-Wright, S.H. Harding and Basma for the appellant; Smythe, Q.C. and Miss Taylor for the respondents.

TEJAN, J.A.: 25 This is an appeal against the judgment of McCormack, J. dated December 1st, 1972. The circumstances of the case arise out of an oral agreement made on May 19th, 1971, between the appellant and the respondents, whereby the respondents offered to sell and the appellant agreed to buy 8,000 bags of onions on an oral 30 warranty that the onions were in good condition. The agreement, without the warranty, was on the same date reduced into writing and the written agreement reads as follows: "This is to confirm our agreement of to .day's date that we have sold to you and you agreed to buy 8000 red net bags of 35 Egyptian onions, which arrived in Freetown yesterday per B.S. Emma Menthenitis, at the price of Le3.35 per bag c & f Freetown. Payment will be effected by cheque certified by the Standard Bank of Sierra Leone Ltd., for the total value of Le26,800 (twenty-six thousand eight hundred leones), pay- 40 able on July lOth, 1971.

Please be informed that the said cheque should be presented to our office at the latest tomorrow morning in order to instruct for the release of the said consignment." The appellant's case is that when he took delivery of the onions, 5 he discovered that 4,120 bags of onions were rotten, 74 bags of onions short-delivered, and that another 400 bags of onions were half-full. The appellant reported his discovery to the respondents but the respondents' manager told him that the shortage was a matter for the insurance company. The manager there and then 10 drafted a letter which the appellant was to write to the respon dents' company. This letter dated June 17th, 1971 is in the following terms: "With reference to the consignment of Egyptian onions bought from you which arrived in Freetown per S.S. Emma 15 Menthenitis, please note that our claim regarding the said consignment is as follows: 7 4 bags short delivery; 400 bags arrived half packed, i.e. only 200 bags were full. Please refund us the value of 27 4 bags, being the total value of our claim, as the insurance was not our responsibility." 20 The reply to this letter was dated June 26th, 1971. In the reply, the respondents stated that their contract with the appellant carried no responsibilities with regard to his claim but for the sake of co-operation they would like to have official documents from the Port Authority with regard to the matters mentioned in the 25 appellant's letter. With regard to the condition of the onions, the appellant's witnesses, Abu Dyfan and Victor Coker gave evidence of this. Abu Dyfan bought 600 bags of onions out of the consignment and although he selected 600 bags which appeared to him to be 30 the best, yet in under a fortnight the onions started to rot and his estimated loss was 200 bags of onions; Dyfan complained to Mr. Lofti of the respondents' company, who promised to write to the head office. According to Dyfan, Mr. Lofti "was always saying different things at different times." 35 Victor Coker, who was the clearing agent of the appellant, took delivery of the onions and when he was taking delivery, he noticed that "the bags of onions were producing a strong smell." He also observed some spots on the bags from which he could see that the onions had started to rot. 40 Mohamed Lofti, the assistant manager of the respondents' company, on the other hand, denied that the onions were not

MANSOUR v. EL NASR EXPORT & IMPORT CO., 1972-73 ALR S.L. 385 C.A. in "good condition." He said that when he saw the onions on May 29th, 1971 in the store of the appellant at 5 Sackville Street, they were in good condition, and that wlien he noticed that the store was a closed store, he advised the appellant to erect fans in it. 5 Mr. Josephus Smith also gave evidence with regard to the condition of the onions. This witness delivered the onions to Victor Coker the agent of the appellant, and he did not see "any rotten bags of onions or observe any smell." Dealing with the question of warranty, McCormack, J., in his 10 judgment, said: "In s.2(1) of the Sale of Goods Act (cap. 225 ), the term 'warranty' means- 'an agreement with reference to goods which are the subject of a contract of sale, but collateral to the main purpose of such contract, the breach of which gives 15 rise to a claim for damages, but not to a right to reject the goods and treat the contract as repudiated'.'' Further on in the judgment, the learned judge said: "I therefore accept the plaintiff's statement that the defendant orally warranted to him that the onions were in 'good condition'. Both parties 20 agreed that the onions are specific goods of a perishable nature." The learned judge, having found that the respondents orally warranted the soundness of the onions went on to say - "I now come to consider what opportunity the plaintiff had of examining the onions for the purpose of ascertaining 25 whether they were in conformity with the warranty under the contract. The evidence is that the entire cargo of onions was off-loaded from the ship 'Emma Menthenitis' and stacked outside shed No.2 at Queen Elizabeth II Quay from which position deliveries to several consignees were made. The 30 evidence is not controverted. The agent of the plaintiff, Mr. V .D. Coker, who went to take delivery on behalf of the plaintiff and the opportunity of seeing, toughing, feeling and smelling the onions for the purpose of ascertaining whether they were in 'good condition.' The plaintiff also, in my view, 35 had opportunity of examining the delivery of the first batch of 200 bags and subsequent batches of 200 bags when they were delivered at his store, by the simple and natural process of seeing, touching, feeling and smelling to ascertain whether they were in 'good condition' in conformity with the contract. 40 If the onions were rotten and not in good condition, why did

the plaintiff take delivery at all? I find that the plaintiff had reasonable opportunity of examining the onions for the purpose of ascertaining whether they were in conformity with the contract, and that he accepted delivery of the 5 onions." In his first ground of appeal, the appellant complained that the "learned judge erred in law in that, having found that the res pondents orally warranted the soundness of the goods comprised in the contract, he later found that it was necessary for the apel- 10 lant to examine the goods." The expression used by the respon dents was "good condition" and the words were used before the agreement was written. The learned judge found that the expression "in good condition" amounted to a warranty of the soundness of the onions. 15 The subject·matter of the contract between the appellant and the respondents is a specific existing chattel and a statement made as to the quality possessed by or attaching to the onions by the respondents amounts to a warranty. The expression that the "onions were in good condition" amounted to a statement as to 20 the quality possessed by or attaching to the onions. Where such a statement as to the quality of a chattel is made, I do not think that it should be necessary for the buyer to examine the chattel. In the case of Bannerman v. White (1) there was a contract for the sale of large quantity of hops, at a time when trouble was 25 being caused to the brewing industry in consequence of sulphur getting into beer, owing to the hops from which it was made being treated with sulphur by the growers. During the negotiations for the sale the defendants, who could not sell to their customers hops that had been treated with sulphur, stated expressly that they 30 would not consider the matter if sulphur had been used; and the plaintiff replied: "There was no mould this year and therefore no occasion to use any sulphur." As a matter of fact, sulphur had been used in five out of three hundred acres, and the hops from those five acres had become inseparably mixed with the others. 35 The court found (10 C.B.N.S. at 860; 142 E.R. at 692) that "this undertaking [that no sulphur had been used] was a pre liminary stipulation; and if it had not been given, the defendants would not have gone on with the treaty which resulted in the sale." In the present case, I think the appellants would not have 40 bought the onions if the warranty that the onions were in good condition had not been given, or alternatively, the appellants

MANSOUR v. EL NASR EXPORT & IMPORT CO., 1972-73 ALR S.L. 385 C.A. would have requested to have the onions examined before enter ing into the contract of sale. I have carried out extensive research, and the authorities I have been able so far to discover, where the buyer of goods is required to examine them after a warranty of the soundness of the goods has been given, relate to cases in 5 which, in addition to the warranty of the soundness of the goods, there is a condition that the goods should be examined. The appellant also complained in his second ground of appeal that - "the learned trial judge having correctly stated the law as to 'warranty,' that is to say that 'warranty' means 'an agreement 10 with reference to goods which are the subject of a contract of sale, but collateral to the main purpose of such contract, the breach of which gives rise to a claim for damages, but not to a right to reject the goods and treat the contract as repudiated,' contradicted himself by asking the question 'If the 15 onions were not in good condition, why did the plaintiff take delivery at all?' '' In the Sale of Goods Act (cap. 225 ), according to s.2(1) "'warranty' means an agreement with reference to goods which are the subject of a contract of sale, but collateral to 20 the main purpose of such contract, the breach of which gives rise to a claim for damages, but not to a right to reject the goods and treat the contract as repudiated." Under the Sale of Goods Act, 1893 a buyer may reject goods if they do not correspond in quality, fitness, or description with the 25 contract. The buyer's obligation to accept depends on the com pliance by the seller with his obligation to deliver. If the contract is for specific goods a stipulation as to quality or fitness is prima facie an independent contract collateral to the principal agreement and only giving rise to an action for damages. 30 In the present case, the contract was for the sale of specific goods, namely 8,000 bags of Egyptian onions. A stipulation as to the fitness of the onions was made by a representative of the respondents' company when he told the appellant that the onions were in good condition. This being a warranty as to the quality 35 and fitness of the onions, it did not affect the foundation of the contract but was simply collateral to its main purpose, and since a "breach of warranty gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated" the appellant even after having discovered that some of the onions 40 were not in good condition and that some were short-delivered,